UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For fiscal year ended December 31, 2011
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 333-167227
WINECOM INC.
(Exact name of registrant as specified in its Charter)
Nevada 26-2944840
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2 Duchifat Street,
Kibbutz Dovrat, D.N Emek Yezreel Israel 19325
(Address of principal executive offices) (Zip Code)
011 (972) 57-946-2208
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address, and former fiscal year,
if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.0001
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrant's most recently completed second fiscal
quarter. Not available
As of March 3, 2012, there were 5,000,000 shares of our common stock issued and
outstanding.
WINECOM INC.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this Annual Report on Form 10-K that are not
historical facts are "forward-looking statements." Forward-looking statements
may include our statements regarding our goals, beliefs, strategies, objectives,
plan, including product and service developments, future financial conditions,
results or projections or current expectations. Such forward-looking statements
may be identified by, among other things, the use of forward-looking terminology
such as "believes," "estimates," "intends," "plan" "expects," "may," "will,"
"should," "predicts," "anticipates," "continues," or "potential," or the
negative thereof or other variations thereon or comparable terminology, and
similar expressions are intended to identify forward-looking statements. We
remind readers that forward-looking statements are merely predictions and
therefore inherently subject to uncertainties and other factors and involve
known and unknown risks that could cause the actual results, performance, levels
of activity, or our achievements, or industry results, to be materially
different from any future results, performance, levels of activity, or our
achievements, or industry results, expressed or implied by such forward-looking
statements. Such forward-looking statements appear in Item 1 - "Business" and
Item 7 - "Management's Discussion and Analysis of Financial Condition and
Results of Operations," as well as elsewhere in this Annual.
The factors discussed herein and expressed from time to time in our filings with
the Securities and Exchange Commission could cause actual results and
developments to be materially different from those expressed in or implied by
such statements. The forward-looking statements are made only as of the date of
this filing, and we undertake no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.
Further information on potential factors that could affect our business is
described under the heading "Risks Related to Our Business, Strategy and
Industry" in "Risk Factors" in Item 1A of this Annual Report on Form 10-K.
INTRODUCTION
Unless otherwise specified or required by context, as used in this Annual
Report, the terms "we," "our," "us" and the "Company" refer collectively to
Winecom Inc. The term "fiscal year" refers to our fiscal year ending December
31. Unless otherwise indicated, the term "common stock" refers to shares of our
common stock.
Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with United States generally accepted accounting
principles (U.S. GAAP).
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TABLE OF CONTENTS
PART I
ITEM 1. Business 4
ITEM 1A. Risk Factors 11
ITEM 1B. Unresolved Staff Comments 11
ITEM 2. Properties 11
ITEM 3. Legal Proceedings 12
ITEM 4. Removed and Reserved 12
PART II
ITEM 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 12
ITEM 6. Selected Financial Data 12
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 12
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 16
ITEM 8. Financial Statements and Supplementary Data 17
ITEM 9. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure 27
ITEM 9A[T]. Controls and Procedures 27
ITEM 9B. Other Information 28
PART III
ITEM 10. Directors, Executive Officers, and Corporate Governance 28
ITEM 11. Executive Compensation 30
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 31
ITEM 13. Certain Relationships and Related Transactions, and Director
Independence 32
ITEM 14. Principal Accounting Fees and Services 32
PART IV
ITEM 15. Exhibits, Financial Statement Schedules 33
Signatures 34
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PART I
ITEM 1. BUSINESS
Winecom Inc. is a development stage company that was incorporated under the laws
of the state of Nevada on July 1, 2008. We currently have no revenues and no
significant assets.
We offer a social networking website that focuses on building online communities
of wine lovers. Our website allows wine lovers to chat, post pictures and
videos, share wine expertise and experiences, create and share events, and
manage their wine collections. Our website, available at www.winecom.ning.com,
is accessible but is still a work-in-progress and in the development stage.
Though our website, www.winecom.ning.com is currently accessible it is not yet
prepared for a full public launch. It is currently in the testing phase as we
are reviewing the operations of the social network and various features. The
website will likely remain accessible for some time as we troubleshoot and test
various aspects of the system. Our references to the `public launch' of our site
are specifically intended to refer to the time in our development when our
website is complete and we begin engaging in marketing activities to generate
awareness of www.winecom.ning.com. We currently have approximately 50 users
using our website.
We have not generated any revenue from our business, and we will need to raise
significant, additional funds for the future development of our business and to
respond to unanticipated requirements or expenses. Our ability to successfully
develop our product and to eventually produce and use it to generate operating
revenues also depends on our ability to obtain the necessary financing to
implement our business plan. Given that we have no operating history, no
revenues and only losses to date, we may not be able to achieve this goal, and
we may go out of business. We may need to issue additional equity securities in
the future to raise the necessary funds. We do not currently have any
arrangements for additional financing and we can provide no assurance to
investors we will be able to find such financing if further funding is required.
Obtaining additional financing would be subject to a number of factors,
including investor acceptance of our planned game and our business model. The
issuance of additional equity securities by us would result in a significant
dilution in the equity interests of our current stockholders. Obtaining loans
will increase our liabilities and future cash commitments, and there can be no
assurance that we will even have sufficient funds to repay our future
indebtedness or that we will not default on our future debts if we are able to
even obtain loans.
There can be no assurance that capital will continue to be available if
necessary to meet future funding needs or, if the capital is available, that it
will be on terms acceptable to us. If we are unable to obtain financing in the
amounts and on terms deemed acceptable to us, we may be forced to scale back or
cease operations, which might result in the loss of some or all of your
investment in our common stock.
Prior to the public launch of our website we need to develop our wine collection
management system and revamp the overall appearance of our website. We are in
the process of identifying a software developer to develop and integrate a wine
collection system with our website. We plan to generate revenues through the
sale of this feature as a premium service at a cost of $4.99 per month.
Consequently, we must complete this development prior to the public launch.
Additionally, we plan to hire a freelance graphic designer to revamp the overall
visual appearance of our website and make it more appealing and modern.
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Once the development of the wine collection system and the revamping of our
website have been completed, we will publicly announce the launch of our new
website. At this point in time our website will be ready to generate revenues.
We will then focus our efforts on driving visitors to our website by promoting
our website with Google Adwords and adding language translations to foreign
visitors. We will also attempt to generate revenues by negotiating agreements
with third-party merchants to display their goods on our site and pay us a
commission if our visitors purchase their products. We have not yet identified
such merchants and there can be no assurance that we will be able to once we
reach this stage in our business development.
We are in the early stage of our business plan. We currently have no revenues
and no user subscriptions for our website. Our activities to date have been
limited to organizational matters, development of our business plan, development
of our website, and efforts related to becoming a publicly traded company.
Our offices are currently located at 2 Duchifat Street, Kibbutz Dovrat, D.N Emek
Yezreel 19325, Israel, which office has been donated free of charge from our
Secretary and director, Mr. Shamir Benita. The address of agent for service in
Nevada and registered corporate office is c/o EastBiz.com, Inc., 5348 Vegas Dr.,
Las Vegas, NV 89108 USA. Our telephone number is 011 (972) 57-946-2208. We have
a website at www.winecom.ning.com.
We have two executive officers who also serve as our directors. Mr. Mordechay
David, our President and a Director, has more than 15 years of experience as a
winemaker working at the Binyamina Winery, Israel's fourth largest wine
producer. Mr. Shamir Benita our Secretary, Treasurer, and a Director, has
general business management, marketing, and logistics experience working in the
public education sector. Both Mr. David and Mr. Benita reside in Israel.
We have never declared bankruptcy, never been in receivership, and have never
been involved in any legal action or proceedings. Since becoming incorporated,
we have not made any significant purchase or sale of assets, nor have we been
involved in any mergers, acquisitions or consolidations. Neither Winecom Inc.,
nor our officers, directors, promoters or affiliates, has had preliminary
contact or discussions with, nor do we have any present plans, proposals,
arrangements or understandings with any representatives of the owners of any
business or company regarding the possibility of an acquisition or merger.
SOCIAL NETWORKING WEBSITES, GENERALLY
Social networking websites provide internet users with services that allow them
to form, join, or participate in online communities and to communicate with
others regarding common interests and pursuits. Social networking websites have
experienced increasing popularity in the last decade, and many sites have grown
into broad networks encompassing tens of millions of users. Our management
believes that the popularity of general interest social networking sites such as
Facebook has opened the door for more specialized and exclusive services that
cater to special interest groups.
OUR WEBSITE
We have acquired web hosting space for our website at the cost of $30 per month.
Our website, available at www.winecom.ning.com, is accessible but is still a
work-in-progress and in the development stage.
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To date our website has the following functions and services:
MEMBER PROFILES
Subscribers can customize their profile pages with their own design, choice of
widgets and profile applications, and may choose to make their profile public or
private to other subscribers.
LATEST ACTIVITY
A real-time, dynamic activity feed of everything happening across our website
including status updates from subscribers.
PHOTOS AND VIDEOS
Subscribers can upload and share photos and videos.
CHAT AND DISCUSSION FORUM
Chat in real-time with other subscribers and single or multi-threaded discussion
forum with categories, photos and attachments.
INTEGRATION WITH OTHER SOCIAL NETWORKING SITES
We completed the integration of Facebook and Twitter into our user sign-up
process, delivering to existing Facebook or Twitter users a streamlined method
of website registration. Users with Facebook or Twitter accounts will now be
able to join the Winecom community without the need to register separately
through the Winecom site. We have also set up photo importing from Flickr, which
allows members to easily import any public photos they have on Flickr to our
website. . We now support Google +1. Our members can recommend our content and
their content to their friends. Additionally, if our members are sharing their
+1s publicly, the content they have shared will be viewable in Google+, to their
Circles and on the +1 list.
WE PLAN TO DEVELOP THE FOLLOWING FUNCTIONS AS FINANCING IS OBTAINED:
WINE COLLECTION MANAGEMENT SYSTEM
Allowing subscribers to manage and track their wine collection, the system can
produce an instant, detailed inventory of a collection and sort it, for
instance, by grower, region or drink-by date.
TRANSLATE TO A DIFFERENT LANGUAGE
Enabling our website visitors to select and display our website in different
languages, we plan to include Deutsch, French and Spanish.
REVENUE MODEL
We plan to generate revenue from the following:
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PREMIUM SERVICES
Visitors to our website are able review posts and search general sections of the
website for free. However, members will be charged $4.99 per month if they would
like to use our premium services such as wine collection managing system, more
storage space and extra features. The extra features available to subscribers of
our premium services will include the ability to start a personal blog on our
website, for example.
ADVERTISEMENT SPACE
One of the major benefits of advertising on a social networking site is that
advertisers can take advantage of the users' demographic information and target
their ads appropriately. We intend to sell advertisement space to companies who
are interested in targeting our subscribers. We anticipate that interested
advertisers will include winemakers and retailers, purveyors of gourmet foods,
and suppliers of lifestyle products and services catering to our target market.
We intend to sell advertising space on our website at a rate of $15 to $50 per
thousand instances of an ad appearing on the website. Advertisements will appear
on all of our web pages in a vertically oriented sidebar.
We also intend to participate in the Google AdSense service. Google AdSense is a
free service, which displays text-only ads that correspond to the keywords of
the content of the page on which the ad is shown. Each time a user of a host
website clicks on an AdSense advertisement, Google provides a flat fee to the
operators of that website on behalf of the applicable advertiser. We were
experimenting with the integration of "dummy" advertisements by Google with our
social network website, and we have since removed these advertisements. We have
not yet applied to Google AdSense program but do intend to do so once our
website has been publicly launched. We did not generate any AdSense related
income and since Google pays a different fee rate according to the niche your
website occupies, we do not yet know what this fee will be.
SALE OF THIRD-PARTY GOODS
We plan to offer our members wine and wine related goods such as corkscrews,
openers, wine decanters, wine stoppers and pourers from third-parties. We will
display on our website ads to items that are available for purchase. These ads
will be linked to the merchant's store and once a member of our site clicks on
it he will be redirected to the merchant's store to complete the purchase. Once
the sale is completed we will be paid a commission by the merchant. We have not
yet identified potential merchants.
THE MARKET OPPORTUNITY
In its report on Social Network Demographics and Usage dated May 2010,
eMarketer, an aggregator of worldwide market research, noted the following
observations and predictions regarding social networking:
* "Social network usage rose sharply in 2009 largely due to the
ever-increasing popularity of Facebook;
* 57.5% of U.S. Internet users, or 127 million people, will use a social
network at least once a month in 2010;
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* By 2014, nearly two-thirds of all U.S. Internet users, or 164.9
million people, will be regular users of social networks;
* Adults will continue to increase their use of social networks, driving
most of the growth in the next few years; and
* In 2010 59.2% of adults online will visit social networks regularly,
up from 52.4% in 2009; and
* By 2014, 139.6 million US adults will be regular users, up 56% over
2009.
In addition to the predicted increases in the use of social networking services
outlined above, our management believes that the market for wine and gourmet
related media has grown significantly over the past decade. This growth is most
noticeably evidenced by the advent of television outlets such as Food
Television, the Food Channel(R), Food Network, and the Cooking Channel, and the
numerous websites, blogs, and printed or online magazines covering culinary and
wine related topics. Our management believes that the predicted growth for
social networking websites and the perceived demand for wine and gourmet related
media indicates the presence of a large consumer market for niche, wine related
social networking websites like ours.
COMPETITION AND COMPETITIVE STRATEGY
The social networking website industry is highly competitive and, at times,
subject to rapidly changing consumer preferences and industry trends.
Competition is generally a function of the website's brand strength and the
success of its marketing strategies, its user capacity and reliability, and its
ability to accommodate and integrate evolving technology and features (such as
smart-phone or Twitter compatibility, for example). Additionally, with regard to
the online retail component of our business, competition is generally a function
of the assortment and continuity of merchandise selection offered, reliable
order fulfillment and delivery, and the level of brand support for products
offered.
We will be required to compete with a large number of niche social networking
and merchandising websites, many of which have significantly greater resources
than we do. Many of our competitors also have the ability to develop and market
products and services similar to (and competitive with) our products and
services. Specifically, we compete with the major niche social networking
websites such as snooth, Bottlenotes, cork'd, VINFOLOIO, calwineries and WineQ.
We also compete with several smaller niche social websites brands such as Adegg,
OpenBottles and Tastoria. We believe that we are currently one of the smallest
in the industry, as we currently have only a nominal web presence and no
revenues from our business operations.
Management believes we can offset any such competitive disadvantages by being a
price leader in the marketplace, first by offering free access to our website,
and thereafter by offering more competitively priced premium services.
Initially, general subscriptions to our site will be free and premium
subscriptions will be only approximately $4.99 per month. We will also seek to
differentiate ourselves by providing our subscribers with more attractive social
network features, such as tools for subscribers to easily communicate with each
other.
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MARKETING & SALES STRATEGY
The use of Internet is continuing to evolve as a global platform for doing
business. Our major focus in the first year will be to use Google Adwords
program in order to drive traffic to our own website. We plan to take advantage
of the well established Google Adwords marketing program which places online ads
on the search result pages of Internet users. Google uses an advertising
methodology referred to as cost-per-click ("CPC") in its Adwords program. Using
this strategy will allow us to design our own ads, and to select target
locations such as a city or state and use keywords in our ads. A keyword is a
word that is used by an Internet user who is performing an online search to find
out information on a specific topic.
Our primary target market is focused on Internet users who already participate
in social networking websites. With CPC advertising, we only pay for the number
of actual clicks on our advertisement. Each time someone clicks on our Google ad
they will be redirected to our web site. A CPC-based advertising strategy is
cost effective because an advertiser only pays for the leads they receive. The
CPC marketing campaign is an integral part of our long term strategy Our
marketing campaign will monitor daily statistics and track favorite topics in
order to quickly get in synch with our Internet audience. This is a significant
part of our branding strategy.
ONLINE ADVERTISING
The majority of our advertising and promotional activities will be concentrated
on an online advertising campaign using Google Adwords. We have selected Google
because of its success and popularity for web users wishing to find something
using an internet search. The Google Adwords program will allow us to customize
the text of our advertisements, the frequency of each advertisement's
appearance, and the length of the advertising contract. For our purposes, we
believe that this will give us the maximum amount of flexibility and allow us to
closely monitor the costs of the marketing campaign.
EMAIL ADVERTISING CAMPAIGN
We anticipate that an information style email advertising campaign may help to
enhance our online advertising campaign and bring us into direct contact with
people who are interested in using our services. In this regard, we are
considering acquiring email lists, which may be done on an incremental basis so
as not to incur a large expense before determining whether an email campaign
works and meets our expectations.
OPTIMIZING OUR WEBSITE
We plan to work with the web site development contractor to develop a series of
meta-tags for each of the pages of our web site. Meta-tags are keywords that are
added to a web page to make it easier to find that specific web page through
search engines, web browser software and other applications. The information is
not intended to be seen by the casual Internet user. Search engines like Google
and Yahoo are designed to seek out these keywords when someone is performing an
Internet search for a specific topic. By including meta-tags such as "social
networking website for wine lovers", "love wine community" and "chat and share
knowledge about wine", we will be able to help drive more traffic to our web
site.
As our business begins to gain subscribers and become known in the industry we
plan to conduct our own online survey questionnaires from the home page of our
web site.
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SOURCES AND AVAILABILITY OF PRODUCTS AND SUPPLIES
We will be developing our own website, and the distribution of our website
services will be over the Internet. We intend to engage the services of
independent contractors in relation to web design and programming as we may
require. We believe there are no constraints on the sources or availability of
products, supplies, or suppliers related to our business.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
Our website will be available to the general public over the Internet.
Initially, general subscriptions will be free, and premium subscriptions will be
approximately $4.99 per month. As our subscription fees will be priced for mass
market consumption, we do not anticipate dependence on one or a few major
customers for the foreseeable future.
PATENTS, TRADEMARKS, LICENSES, FRANCHISE RESTRICTIONS AND CONTRACTUAL
OBLIGATIONS & CONCESSIONS
We have not entered into any franchise agreements or other contracts that have
given, or could give rise to, obligations or concessions. We are planning to
develop our website and intend to protect its contents by registering for
appropriate copyright and trademark protection where our management deems such
registration necessary or beneficial. We have not conducted any independent
searches or other inquiry into patents or other intellectual property which may
be owned by others and which may constrain our business plan, nor have we
received independent opinions of counsel on such matters. Beyond our trade name,
we do not hold any other intellectual property rights.
EFFECT OF EXISTING OR PROBABLE GOVERNMENT REGULATION.
We do not believe that government regulation will have a material impact on the
way we conduct our business. Given the alcohol related content that will be
available on our website, we will implement appropriate safeguards and
electronic warnings to ensure that visitors to our site are aware of any age
related restrictions that may be applicable to them while visiting our site.
RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS
We have not incurred any research and development costs to date. We have plans
to undertake certain research and development activities during the first year
of operation related to the development of our website. For additional details
please see "Management's Discussion and Analysis of Financial Condition and
Results of Operation - Plan of Operation" below.
EMPLOYEES
We have commenced only limited operations, and therefore currently have no
employees other than our officers/directors, who each spend approximately 15 to
20 hours a week on our business as is required. Mr. David and Mr. Benita are
both engaged with other businesses which will occupy the remainder of their
working time every week. Although neither Mr. David or Mr. Benita are under
obligation to provide a minimum quantity of hourly services, they do not
anticipate providing less than 6 hours per week of service in order to perform
basic corporate maintenance and bookkeeping. We will consider retaining
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full-time management and administrative support personnel as our business and
operations increase. We do not foresee engaging full-time management or
administrative support personnel during the next 12 months.
Over the next 12 months, Mr. Mordechay David will be primarily responsible for:
* General management of our company's operations
* Management and direction of financing activities
* Ensuring the software development plan is on budget and on schedule
* Overseeing the wine collection management system project development
* Responsible for the discussion boards' conception and policies.
Mr. Shamir Benita will be responsible for:
* Preparing and updating our website
* Financing activities
* Setting up a Google Adwords account
* Identify, interview and select software developer for the wine
collection management system
* Overseeing the wine collection management system project development
* Promoting and executing our marketing plan
SALES OF COMMON STOCK
During 2011, we sold 1,000,000 shares of common stock for net proceeds of
$39,466.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
We do not own interests in any real property. Mr. Shamir Benita, our Treasurer,
Secretary and director, has provided us with 500 sq ft of furnished office space
located at 2 Duchifat Street, Kibbutz Dovrat, D.N Emek Yezreel 19325, Israel
free of charge for at least the next 12 months. This location currently serves
as our primary office for planning and implementing our business plan. This
space is currently sufficient for our purposes, and we expect it to be
sufficient for the foreseeable future. We also maintain a resident corporate
office at 5348 Vegas Dr., Las Vegas, Nevada, 89108. This location is a virtual
office that we maintain for $75 per month pursuant to a lease with INC
Management, a company affiliated with EastBiz.com, Inc. which provides us with a
mailing address for communications, a contact phone number as well as
secretarial and administrative services should we need it. Our
officers/directors do not work from this location. We may terminate the lease
arrangement upon 30 days written notice to INC Management. Finally, we have also
contracted with a third party web-hosting service to obtain server space and
maintenance for our website at the minimal cost of $30 per month.
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ITEM 3. LEGAL PROCEEDINGS
We know of no existing or pending legal proceedings against us, nor are we
involved as a plaintiff in any proceeding or pending litigation. There are no
proceedings in which any of our directors, officers or any of their respective
affiliates, or any beneficial stockholder, is an adverse party or has a material
interest adverse to our interest. Our address for service of process in Nevada
is 5348 Vegas Dr. Las Vegas, NV 89108 USA, Tel: (888) 284-3821
ITEM 4. (REMOVED AND RESERVED)
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is quoted on the OTC Bulletin Board under the symbol "WNCM";
however, there is no active market for our common stock. As of February 28,
2012, the Company had 5,000,000 shares of our common stock issued and
outstanding held by 37 holders of record.
HOLDERS
On February 28, 2012, there were 37 holders of record of our common stock.
DIVIDEND POLICY
As of the date of this Annual Report, we have not paid any cash dividends to
stockholders. The declaration of any future cash dividend will be at the
discretion of our Board of Directors and will depend upon our earnings, if any,
our capital requirements and financial position, our general economic and other
pertinent conditions. It is our present intention not to pay any cash dividends
in the foreseeable future, but rather to reinvest earnings, if any, into our
business.
RECENT SALES OF UNREGISTERED SECURITIES
We have not sold or issued any securities during the fiscal year ended December
31, 2011 without registration under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance on exemption(s) from such registration
requirements.
ITEM 6. SELECTED FINANCIAL DATA
Not Applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR AUDITED
FINANCIAL STATEMENTS AND THE RELATED NOTES THAT APPEAR ELSEWHERE IN THIS ANNUAL
REPORT. THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT
REFLECT OUR PLANS, ESTIMATES AND BELIEFS. OUR ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD LOOKING STATEMENTS. FACTORS THAT
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COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED BELOW AND
ELSEWHERE IN THIS ANNUAL REPORT.
FORWARD-LOOKING STATEMENTS
Certain statements made in this report may constitute "forward-looking
statements on our current expectations and projections about future events".
These forward-looking statements involve known or unknown risks, uncertainties
and other factors that may cause the actual results, performance, or
achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking
statements. In some cases you can identify forward-looking statements by
terminology such as "may," "should," "potential," "continue," "expects,"
"anticipates," "intends," "plans," "believes," "estimates," and similar
expressions. These statements are based on our current beliefs, expectations,
and assumptions and are subject to a number of risks and uncertainties. Although
we believe that the expectations reflected-in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. These forward-looking statements are made as of the date of
this report, and we assume no obligation to update these forward-looking
statements whether as a result of new information, future events, or otherwise,
other than as required by law. In light of these assumptions, risks, and
uncertainties, the forward-looking events discussed in this report might not
occur and actual results and events may vary significantly from those discussed
in the forward-looking statements.
OVERVIEW
Winecom Inc. was incorporated under the laws of the state of Nevada on July 1,
2008 and is engaged in the development of an Internet social website that caters
to wine lovers.
Our offices are currently located at 2 Duchifat Street, Kibbutz Dovrat, D.N Emek
Yezreel 19325, Israel. Our telephone number is Tel: 011 (972) 57-946-2208. We
have a website at www.winecom.ning.com, however, the information contained on
our website does not form a part of this annual report. From our inception on
July 1, 2008 to October 2008, we have focused primarily on organizational
matters. Due to the continuing financial crisis in 2008 we suspended our
operations in October 2008, resuming them in September 2009. Since September
2009 we have been developing our website.
We are developing and offer a social networking website that focuses on building
online communities of wine lovers. Our website allows wine lovers to chat, post
pictures/videos, share wine expertise and experiences, create and share events,
and manage their wine collections. Our website, available at winecom.ning.com,
is accessible but is still a work-in-progress and in the development stage.
Though our website, www.winecom.ning.com is currently accessible it is not yet
prepared for a full public launch. It is currently in the testing phase as we
are reviewing the operations of the social network and various features.
We have not generated any revenue from our business, and we will need to raise
significant, additional funds for the future development of our business and to
respond to unanticipated requirements or expenses. Our ability to successfully
develop our product and to eventually produce and use it to generate operating
revenues also depends on our ability to obtain the necessary financing to
implement our business plan. Given that we have no operating history, no
revenues and only losses to date, we may not be able to achieve this goal, and
we may go out of business. We may need to issue additional equity securities in
the future to raise the necessary funds. We do not currently have any
arrangements for additional financing and we can provide no assurance to
investors we will be able to find such financing if further funding is required.
Obtaining additional financing would be subject to a number of factors,
including investor acceptance of our planned game and our business model. The
13
issuance of additional equity securities by us would result in a significant
dilution in the equity interests of our current stockholders. Obtaining loans
will increase our liabilities and future cash commitments, and there can be no
assurance that we will even have sufficient funds to repay our future
indebtedness or that we will not default on our future debts if we are able to
even obtain loans.
There can be no assurance that capital will continue to be available if
necessary to meet future funding needs or, if the capital is available, that it
will be on terms acceptable to us. If we are unable to obtain financing in the
amounts and on terms deemed acceptable to us, we may be forced to scale back or
cease operations, which might result in the loss of some or all of your
investment in our common stock.
In our management's opinion the emerging alternatives to general social
networking websites are niche social networking sites which are social networks
targeted at a specific audience. By targeting a specific audience, niche social
networks will be able to create a strong and lasting bond among their users. We
believe, although no assurance can be given, that our plan to offer a niche
social networking website for wine lovers is timely given the current market
conditions.
From July 1, 2008 (inception) to December 31, 2011, we have incurred accumulated
net losses of $48,036. As of December 31, 2011, we had $3,111 in current assets
and current liabilities of $18,934. Our auditors' report on the financial
statements for the year ended December 31, 2011 includes a going concern
opinion. This means that our auditors believe there is substantial doubt as to
whether we can continue as an ongoing business for the next twelve months. We do
not anticipate that we will generate revenues at least until we have completed
and launched our website.
During 2011, we sold 1,000,000 shares of common stock for gross proceeds of
$40,000.
PLAN OF OPERATIONS
We are developing and plan to offer a social networking website that focuses on
building online communities of wine lovers. Our website will allow wine lovers
to chat, post pictures/videos, share knowledge about their favorite wine, create
and share events and manage their wine collections.
Our business objectives for the next 12 months, provided the necessary funding
is available, are to:
* raise additional funds for the future development of our business.
* build the brand recognition of Winecom;
* complete the development of our website;
* create interest in our website; and
* to establish our website as a one-stop-shop for wine lovers.
Our goals over the next 12 months are to:
* drive traffic to our website through marketing efforts,
* set up a Google Ads account and place ads on our website; and
* sell third-party goods on our website;
Our ability to achieve our business objectives and goals is entirely dependent
upon our ability to raise capital.
ACTIVITIES TO DATE
We were incorporated in the State of Nevada on July 1, 2008. We are a
development stage company. From our inception to date, we have not generated any
revenues and our operations have been limited to organizational matters related
to the development of our business and our becoming a public company. Since
September 2009 we have been developing a social networking website that caters
to wine lovers. During 2011, we completed the integration of Facebook and
Twitter into our user sign-up process, delivering to existing Facebook or
Twitter users a streamlined method of website registration. Users with Facebook
or Twitter accounts will now be able to join the Winecom community without the
need to register separately through the Winecom site. We have also set up photo
14
importing from Flickr, which allows members to easily import any public photos
they have on Flickr to our website. . We now support Google +1. Our members can
recommend our content and their content to their friends. Additionally, if our
members are sharing their +1s publicly, the content they have shared will be
viewable in Google+, to their Circles and on the +1 list.
RESULTS OF OPERATIONS
COMPARISON OF THE YEARS ENDED DECEMBER 31, 2011 AND 2010
OPERATING EXPENSES
The Company's operating expenses increased by $40,876 from $2,546 in 2010 to
$43,422 in 2011. Operating expenses in 2011 consisted of $20,996 of professional
fees related to the issuance and trading of our common stock, $17,808 of
professional fees related to filing reports with the SEC, $1,950 of travel
expense, $1,799 of website related costs, and $869 of general and administrative
expenses. Operating expenses for 2010 consisted of $753 of professional fees
related to the issuance and trading of our common stock, $1,000 of professional
fees related to filing reports with the SEC, $231 of website related costs, and
$562 of general and administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2011, we had total current assets of $3,111 (consisting entirely
of cash), total current liabilities of $18,934, and negative working capital of
$15,823 compared to total current assets of $27,417 (consisting of cash of $164
and deferred offering costs of $27,253), total current liabilities of $12,031,
and working capital of $15,386 as of December 31, 2010.
Historically, we have financed our cash flow and operations from the sale of
stock and advances from our director. Net cash provided by financing activities
was $43,244 from July 1, 2008 (date of inception) to December 31, 2011,
including $2,818 loaned to us by our President and Director, Mordechay David,
proceeds from the sale of common stock to our executive officers of $20,000 and
$40,000 from the sale of common stock to unrelated third parties, less $19,574
of offering costs related to sales of common stock. The loans from Mr. David are
unsecured, non-interest bearing and due upon demand. Net cash provided by
financing activities during the year ended December 31, 2011 was $39,466
consisting of $40,000 received from the sale of common stock, reduced by
offering costs of $534. Net cash provided by financing activities during the
year ended December 31, 2010 was $960 consisting of $20,000 received from our
Directors as payment for stock issued in 2008, reduced by offering costs of
$19,040 related to the sale of common stock in 2011. We have no external sources
of liquidity from financial institutions.
We have not yet generated any revenue from our operations. We will require
additional funds to fully implement our plans. These funds may be raised through
equity financing, debt financing, or other sources, which may result in the
dilution in the equity ownership of our shares. We will also need more funds if
the costs of the development of our website costs greater than we have budgeted.
We will also require additional financing to sustain our business operations if
we are not successful in earning revenues. We currently do not have any
arrangements for additional financing and we may not be able to obtain financing
when required. Our future is dependent upon our ability to obtain financing, the
successful development of our website, a successful marketing and promotion
program and, further in the future, achieving a profitable level of operations.
The issuance of additional equity securities by us could result in a significant
dilution in the equity interests of our current stockholders. Obtaining
commercial loans, assuming those loans would be available, will increase our
liabilities and future cash commitments. We will require additional funds to
maintain our reporting status with the SEC and remain in good standing with the
state of Nevada.
15
There are no assurances that we will be able to obtain further funds required
for our continued operations. As widely reported, the global and domestic
financial markets have been extremely volatile in recent months. If such
conditions and constraints continue, we may not be able to acquire additional
funds either through credit markets or through equity markets. Even if
additional financing is available, it may not be available on terms we find
favorable. At this time, there are no anticipated sources of additional funds in
place. Failure to secure the needed additional financing will have an adverse
effect on our ability to remain in business.
GOING CONCERN
We have incurred net losses of $48,036 from our inception on July 1, 2008 to
December 31, 2011 and have completed only the preliminary stages of our business
plan. We anticipate incurring additional losses before realizing any revenues
and will depend on additional financing in order to meet our continuing
obligations and ultimately, to attain profitability. Our ability to obtain
additional financing, whether through the issuance of additional equity or
through the assumption of debt, is uncertain. Accordingly, our independent
auditors' report on our financial statements for the year ended December 31,
2011 includes an explanatory paragraph regarding concerns about our ability to
continue as a going concern, including additional information contained in the
notes to our financial statements describing the circumstances leading to this
disclosure. The financial statements do not include any adjustments that might
result from the uncertainty about our ability to continue our business.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
We do not expect the adoption of any recently issued accounting pronouncements
to have a significant impact on our net results of operations, financial
position, or cash flows.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Winecom Inc.
(A Development Stage Company)
December 31, 2011 and 2010
Report of Independent Registered Public Accounting Firm 18
Balance Sheets as of December 31, 2011 and 2010 19
Statements of Operations for the Years Ended December 31, 2011 and 2010,
and from July 1, 2008 (Inception) through December 31, 2011 20
Statement of Stockholders' Equity (Deficit) for the Years Ended
December 31, 2011 and 2010, and from July 1, 2008 (Inception) through
December 31, 2011 21
Statements of Cash Flows for the Years Ended December 31, 2011 and 2010,
and from July 1, 2008 (Inception) through December 31, 2011 22
Notes to the Financial Statements 23
17
REPORT OF REGISTERED INDEPENDENT AUDITORS
To the Board of Directors and Stockholders
of Winecom, Inc.:
We have audited the accompanying balance sheets of Winecom Inc. (a Nevada
corporation in the development stage) as of December 31, 2011 and 2010, and the
related statements of operations, stockholders' equity, and cash flows for the
periods ended December 31, 2011 and 2010, and from inception (July 1, 2008)
through December 31, 2011. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Winecom, Inc. as of December
31, 2011 and 2010, and the results of its operations and its cash flows for the
periods ended December 31, 2011 and 2010, and from inception (July 1, 2008)
through December 31, 2011, in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company is in the development stage, and has not
established any source of revenue to cover its operating costs. As such, it has
incurred an operating loss since inception. Further, as of as December 31, 2011,
the cash resources of the Company were insufficient to meet its planned business
objectives. These and other factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plan regarding these
matters is also described in Note 6 to the financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Respectfully submitted,
/s/ Weinberg & Baer LLC
------------------------------------
Weinberg & Baer LLC
Baltimore, Maryland
March 6, 2012
18
WINECOM INC
(A Development Stage Company)
Balance Sheets
December 31, December 31,
2011 2010
-------- --------
ASSETS
CURRENT ASSETS
Cash $ 3,111 $ 164
Deferred offering costs -- 27,253
-------- --------
TOTAL CURRENT ASSETS 3,111 27,417
-------- --------
TOTAL ASSETS $ 3,111 $ 27,417
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Loans payable - director $ 2,818 $ 2,818
Accounts payable 16,116 9,213
-------- --------
TOTAL CURRENT LIABILITIES 18,934 12,031
-------- --------
TOTAL LIABILITIES 18,934 12,031
-------- --------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, 50,000,000 shares authorized, par value $0.0001,
no shares issued and outstanding -- --
Common Stock, 100,000,000 shares authorized, par value $0.0001,
5,000,000 and 4,000,000 shares issued and outstanding, respectively 500 400
Additional paid in capital 31,713 19,600
Deficit accumulated during the development stage (48,036) (4,614)
-------- --------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (15,823) 15,386
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 3,111 $ 27,417
======== ========
The accompanying notes are an integral part of these financial statements.
19
WINECOM INC
(A Development Stage Company)
Statements of Operations
July 1, 2008
Years Ended (Inception) to
December 31, December 31,
2011 2010 2011
---------- ---------- ----------
REVENUE $ -- $ -- $ --
---------- ---------- ----------
EXPENSES
General and administrative 43,422 2,546 48,036
---------- ---------- ----------
Loss before income taxes (43,422) (2,546) (48,036)
Provision for income taxes -- -- --
---------- ---------- ----------
NET LOSS $ (43,422) $ (2,546) $ (48,036)
========== ========== ==========
BASIC AND DILUTED
Loss per common share $ (0.01) $ a
---------- ----------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 4,827,397 4,000,000
========== ==========
----------
a = Less than ($0.01) per share
The accompanying notes are an integral part of these financial statements.
20
WINECOM INC
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
Deficit
Common Stock Accumulated Total
-------------------- Stock During the Stockholders'
Number of Paid in Subscriptions Development Equity
Shares Amount Capital Receivable Stage (Deficit)
------ ------ ------- ---------- ----- ---------
July 1, 2008 (Inception) -- $ -- $ -- $ -- $ -- $ --
Common stock issued to Directors
for cash ($0.005 per share) 4,000,000 400 19,600 (20,000) -- --
Net loss -- -- -- -- (818) (818)
--------- --------- --------- --------- --------- ---------
Balances December 31, 2008 4,000,000 400 19,600 (20,000) (818) (818)
Net loss -- -- -- -- (1,250) (1,250)
--------- --------- --------- --------- --------- ---------
Balance December 31, 2009 4,000,000 400 19,600 (20,000) (2,068) (2,068)
Stock subscriptions received -- -- -- 20,000 -- 20,000
Net loss -- -- -- -- (2,546) (2,546)
--------- --------- --------- --------- --------- ---------
Balance December 31, 2010 4,000,000 400 19,600 -- (4,614) 15,386
--------- --------- --------- --------- --------- ---------
Common stock issued for cash, net of
offering costs ($0.04 per share) 1,000,000 100 12,113 -- -- 12,213
Net loss -- -- -- -- (43,422) (43,422)
--------- --------- --------- --------- --------- ---------
Balance December 31, 2011 5,000,000 $ 500 $ 31,713 $ -- $ (48,036) $ (15,823)
========= ========= ========= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
21
WINECOM INC
(A Development Stage Company)
Statements of Cashflows
July 1, 2008
Years Ended (Inception) to
December 31, December 31,
2011 2010 2010
-------- -------- --------
OPERATING ACTIVITIES:
Net loss $(43,422) $ (2,546) $(48,036)
Adjustments To Reconcile Net Loss To Net Cash
Used By Operating Activities
Increase in accounts payable 6,903 1,000 7,903
-------- -------- --------
NET CASH USED BY OPERATING ACTIVITIES (36,519) (1,546) (40,133)
-------- -------- --------
INVESTING ACTIVITIES:
NET CASH USED BY INVESTING ACTIVITIES -- -- --
-------- -------- --------
FINANCING ACTIVITIES:
Proceeds from loans - director -- -- 2,818
Payment of offering costs (534) (19,040) (19,574)
Proceeds from issuance of common stock 40,000 20,000 60,000
-------- -------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 39,466 960 43,244
-------- -------- --------
Net Increase (Decrease) in Cash 2,947 (586) 3,111
Cash, Beginning of Period 164 750 --
-------- -------- --------
CASH, END OF PERIOD $ 3,111 $ 164 $ 3,111
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ -- $ -- $ --
======== ======== ========
Income Taxes $ -- $ -- $ --
======== ======== ========
NONCASH FINANCING ACTIVITY:
Deferred offering costs included in accounts payable $ -- $ 8,213 $ 8,213
======== ======== ========
The accompanying notes are an integral part of these financial statements.
22
WINECOM INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2011 AND 2010
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
The Company was incorporated under the laws of the state of Nevada on July1,
2008. The Company has limited operations and is considered a development stage
company and has not yet realized any revenues from its planned operations. We
are focused on developing a social network website that caters to wine lovers.
Our website focuses on building online communities of people who share
interests, or who are interested in exploring the interests and activities of
other members. Our vision is to create social network sites as a form of online
community of people who share interests and activities or who are interested in
exploring the interests and activities of others.
As a development stage enterprise, the Company discloses the deficit accumulated
during the development stage and the cumulative statements of operations and
cash flows from inception to the current balance sheet date.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements. The
Company bases its estimates on historical experience, management expectations
for future performance, and other assumptions as appropriate. The Company
re-evaluates its estimates on an ongoing basis; actual results may vary from
those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturity of three
months or less when purchased to be cash equivalents.
DEFERRED OFFERING COSTS
Direct costs incurred in connection with the issuance of equity are capitalized
and recorded in paid in capital during the period when proceeds are received.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of the Company's financial instruments, consisting of
accounts payable and accrued liabilities approximate their fair value due to the
short-term maturity of such instruments. Unless otherwise noted, it is
management's opinion that the Company is not exposed to significant interest,
currency or credit risks arising from these financial statements.
INCOME TAXES
Deferred tax assets and liabilities are determined based on the differences
between the financial reporting and tax bases of assets and liabilities using
the enacted tax rates and laws that will be in effect when the differences are
expected to reverse. A valuation allowance is established when necessary to
reduce deferred tax assets to the amounts expected to be realized.
23
The Company accounts for income taxes under the provisions of Financial
Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC")
740, "Accounting for Income Taxes. It prescribes a recognition threshold and
measurement attributes for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return. As a result,
the Company has applied a more-likely-than-not recognition threshold for all tax
uncertainties. The guidance only allows the recognition of those tax benefits
that have a greater than 50% likelihood of being sustained upon examination by
the various taxing authorities. All of the Company's tax years since inception
remain subject to examination by Federal and state jurisdictions.
The Company classifies penalties and interest related to unrecognized tax
benefits as income tax expense in the Statements of Operations. As of December
31, 2011 and December 31, 2010, the Company had no accrued interest or
penalties.
EARNINGS PER SHARE
The basic earnings (loss) per share is calculated by dividing our net income
available to common shareholders by the weighted average number of common shares
during the year. The diluted earnings (loss) per share is calculated by dividing
our net income (loss) available to common shareholders by the diluted weighted
average number of shares outstanding during the year. The diluted weighted
average number of shares outstanding is the basic weighted number of shares
adjusted as of the first of the year for any potentially dilutive debt or
equity.
SOFTWARE DEVELOPMENT COSTS
Software development costs representing capitalized costs of design,
configuration, coding, installation and testing of the Company's website up to
its initial implementation. Upon implementation, the asset will be amortized to
expense over its estimated useful life of three years using the straight-line
method. Ongoing website post-implementation costs of operation, including
training and application maintenance, will be charged to expense as incurred. As
of December 31, 2011, the Company has yet to incur software development costs as
all development has been performed by the Company's officers.
RECENTLY ISSUED ACCOUNTING STANDARDS
In January 2010, the FASB issued Accounting Standards Update ("ASU") 2010-06,
"Improving Disclosures about Fair Value Measurements," which clarifies certain
existing requirements in ASC 820 "Fair Value Measurements and Disclosures," and
requires disclosures related to significant transfers between each level and
additional information about Level 3 activity. FASB ASU 2010-06 begins phasing
in the first fiscal period beginning after December 15, 2009. The Company's
adoption of this guidance did not have an impact on its financial statements and
disclosures.
In October 2009, the FASB issued guidance on "Multiple Deliverable Revenue
Arrangements," updating ASC 605 "Revenue Recognition." This standard provides
application guidance on whether multiple deliverables exist, how the
deliverables should be separated and how the consideration should be allocated
to one or more units of accounting. This update establishes a selling price
hierarchy for determining the selling price of a deliverable. The selling price
used for each deliverable will be based on vendor-specific objective evidence,
if available, third-party evidence if vendor-specific objective evidence is not
available, or estimated selling price if neither vendor-specific or third-party
evidence is available. The guidance is effective prospectively for revenue
arrangements entered into or materially modified in fiscal years beginning on or
after June 15, 2010. The Company's adoption of this guidance did not have an
impact on its financial statements and disclosures.
In October 2009, the FASB issued ASC 985-605, "Software Revenue Recognition."
This guidance changes the accounting model for revenue arrangements that include
both tangible products and software elements that are "essential to the
functionality," and scopes these products out of current software revenue
guidance. The new guidance will include factors to help companies determine what
software elements are considered "essential to the functionality." The
24
amendments will now subject software-enabled products to other revenue guidance
and disclosure requirements, such as guidance surrounding revenue arrangements
with multiple deliverables. The amendments in this guidance are effective
prospectively for revenue arrangements entered into or materially modified in
the fiscal years beginning on or after June 15, 2010. Early application is
permitted. The Company's adoption of this guidance did not have an impact on its
financial statements and disclosures.
In April 2010, the FASB issued ASU No. 2010-17, Revenue Recognition--Milestone
Method (Topic 605): Milestone Method of Revenue Recognition. This ASU codifies
the consensus reached in EITF Issue No. 08-9, "Milestone Method of Revenue
Recognition." The amendments to the Codification provide guidance on defining a
milestone and determining when it may be appropriate to apply the milestone
method of revenue recognition for research or development transactions.
Consideration that is contingent on achievement of a milestone in its entirety
may be recognized as revenue in the period in which the milestone is achieved
only if the milestone is judged to meet certain criteria to be considered
substantive. Milestones should be considered substantive in their entirety and
may not be bifurcated. An arrangement may contain both substantive and
nonsubstantive milestones, and each milestone should be evaluated individually
to determine if it is substantive. ASU 2010-17 is effective on a prospective
basis for milestones achieved in fiscal years, and interim periods within those
years, beginning on or after June 15, 2010. Early adoption is permitted. If a
vendor elects early adoption and the period of adoption is not the beginning of
the entity's fiscal year, the entity should apply 2010-17 retrospectively from
the beginning of the year of adoption. The Company's adoption of this guidance
did not have an impact on its financial statements.
Management does not believe that any other recently issued, but not yet
effective, accounting standards if currently adopted would have a material
effect on the accompanying consolidated financial statements.
NOTE 3. INCOME TAXES
The Company uses the liability method, where deferred tax assets and liabilities
are determined based on the expected future tax consequences of temporary
differences between the carrying amounts of assets and liabilities for financial
and income tax reporting purposes. Since its inception through December 31,
2011, the Company has incurred net losses and, therefore, has no tax liability.
The net deferred tax asset generated by the loss carry-forward has been fully
reserved. The cumulative net operating loss carry-forward is approximately
$48,036 and will expire 20 years from the date the loss was incurred.
As of December 31, 2011, deferred tax assets consisted of the following:
Net operating losses (estimated tax rate 15%) $ 7,205
Less: valuation allowance ($7,205)
-------
Net deferred tax asset $ --
=======
NOTE 4. STOCKHOLDER'S EQUITY (DEFICIT)
AUTHORIZED
The Company is authorized to issue 100,000,000 shares of $0.0001 par value
common stock and 50,000,000 shares of preferred stock, par value $0.0001. All
common stock shares have equal voting rights, are non-assessable and have one
vote per share. Voting rights are not cumulative and, therefore, the holders of
more than 50% of the common stock could, if they choose to do so, elect all of
the directors of the Company.
25
ISSUED AND OUTSTANDING
On July 1, 2008, the Company issued 4,000,000 common shares to its directors for
cash consideration of $20,000. The cash proceeds were received during the year
ended December 31, 2010.
During the year ended December 31, 2011, the Company sold 1,000,000 shares of
common stock for proceeds of $39,466, net of transaction costs of $534. The
Company offset these amounts by $27,253 included in deferred offering costs on
the balance sheet as of December 31, 2010.
NOTE 5. RELATED PARTY TRANSACTIONS
As of December 31, 2011 and 2010 the officers of the Company had advanced $2,818
to the Company. These amounts are non-interest bearing and due on demand.
NOTE 6. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has incurred net losses
for the period from inception (July 1, 2008) through December 31, 2011 totaling
$48,036. This condition raises substantial doubt about the Company's ability to
continue as a going concern. The Company's continuation as a going concern is
dependent on its ability to meet its obligations, to obtain additional financing
as may be required and ultimately to attain profitability. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty. Management is planning to raise additional funds through debt
or equity offerings. There is no guarantee that the Company will be successful
in these efforts.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A(T). CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As required by Rule 13a-15/15d-15 under the Securities and Exchange Act of
1934,as amended (the "Exchange Act"), as of December 31, 2011, we have carried
out an evaluation of the effectiveness of the design and operation of our
Company's disclosure controls and procedures. This evaluation was carried out
under the supervision and with the participation of our Company's management,
our President (Principal Executive Officer) and Treasurer (Principal Accounting
Officer). Based upon the results of that evaluation, our management has
concluded that, as of December 31, 2011, our Company's disclosure controls and
procedures were effective and provide reasonable assurance that material
information related to our Company required to be disclosed in the reports that
we file or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms, and
that such information is accumulated and communicated to management to allow
timely decisions on required disclosure.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. Our internal control system is designed to provide
reasonable assurance to our management and board of directors regarding the
reliability of financial reporting and the preparation of financial statements
for external reporting purposes in accordance with generally accepted accounting
principles. Our internal control over financial reporting includes those
policies and procedures that:
* Pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the
assets of the Company;
* Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles in the United States of
America, and that receipts and expenditures of the Company are being
made only in accordance with authorizations of management and
directors of the Company; and
* Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the Company's
assets that could have a material effect on the financial statements.
Management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2011. In making this assessment, we used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in INTERNAL CONTROL - INTEGRATED FRAMEWORK.
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Our management concluded that, as of December 31, 2011, our internal control
over financial reporting was effective based on the criteria in INTERNAL CONTROL
- INTEGRATED FRAMEWORK issued by the COSO.
This annual report does not include an attestation report of the Company's
independent registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by the
Company's independent registered public accounting firm pursuant to rules of the
SEC that permit the Company to provide only management's report in this annual
report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting
identified in connection with the evaluation described above during the quarter
ended December 31, 2011 that has materially affected or is reasonably likely to
materially affect our internal controls over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The name, age and position of each of our directors and executive officers are
as follows:
Name Age Position
---- --- --------
Mr. Mordechay David 59 President, and Director
Mr. Shamir Benita 32 Treasurer, Secretary and Director
MR. MORDECHAY DAVID
Mr. David is our President and director and has served in these capacities since
July 1, 2008.
Since November 1988, Mr. David has been employed at the Binyamina Winery in
Israel, where he has been responsible for identifying aromas and flavors in
wines, for recommending treatments to improve wine quality and for achieving
wine flavor profiles which meet marketing needs. At Binyamina, Mr. David has
also been responsible for various aspects of the wine production and cellaring
process, including management of grapes, juices and wines, chemical and
ingredient additions, racks, transfers, clarification, blends, shipping and
final preparation for bottling.
We believe Mr. David's qualifications to sit on our board of directors include
his years of experience as a winemaker, as well as his substantial knowledge of
the wine industry.
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MR. SHAMIR BENITA
Mr. Benita is Our Treasurer, Secretary and director, and has served on our Board
of Directors since July 1, 2008.
Since July of 2005 Mr. Benita has been employed by the Micheal Project, a
supplemental addition to the Israeli education system supported by the Israeli
Ministry of Education and implemented in Junior High Schools and High Schools in
the Jewish, Arab, Druze and Bedouin educational sectors. Mr. Benita has been
responsible for managing the logistical aspects of the Micheal Project. In
addition, since August of 2007, Mr. Benita has been a consultant to small
businesses in the area of marketing and sales. Mr. Benita has consulted for
fit2media.com which is website development and management company, Tamar Ziv, a
clothing designer and well as Harbarzel 1, a restaurant in Tel-Aviv during this
time.
We believe Mr. Benita's qualifications to sit on our board of directors include
his years of experience as a consultant to small businesses such as ours in the
area of marketing and sales, as well as his understanding of social networking
websites gained while consulting for fit2media.com.
BOARD COMPOSITION
Our Bylaws provide that the Board of Directors shall consist of no less than 1,
but not more than 9 directors. Each director serves until his successor is
elected and qualified.
COMMITTEES OF THE BOARD OF DIRECTORS
We do not presently have a separately constituted audit committee, compensation
committee, nominating committee, executive committee or any other committees of
our Board of Directors. Nor do we have an audit committee "financial expert." As
such, our entire Board of Directors acts as our audit committee and handles
matters related to compensation and nominations of directors.
SIGNIFICANT EMPLOYEES
We have no significant employees other than the executive officers/directors
described above.
FAMILY RELATIONSHIPS
There are no familial relationships between our officers and directors.
No director, person nominated to become a director, executive officer, promoter
or control person of our company has, during the last ten years: (i) been
convicted in or is currently subject to a pending a criminal proceeding
(excluding traffic violations and other minor offenses); (ii) been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to any federal or state securities or banking or commodities
laws including, without limitation, in any way limiting involvement in any
business activity, or finding any violation with respect to such law, or any law
or regulation respecting financial institutions or insurance companies
including, but not limited to, a temporary or permanent injunction, order of
disgorgement or restitution, civil money penalty or temporary or permanent
29
cease-and-desist order, or removal or prohibition order; or any law or
regulation prohibiting mail or wire fraud or fraud in connection with any
business entity; (iii) any bankruptcy petition been filed by or against the
business of which such person was an executive officer or a general partner,
whether at the time of the bankruptcy or for the two years prior thereto; nor
(iv) been the subject of, or a party to, any sanction or order, not subsequently
reversed, suspended or vacated, of any self-regulatory organization (as defined
in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered
entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7
U.S.C.1(a)(29))), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or persons
associated with a member. (covering stock, commodities or derivatives exchanges,
or other SROs.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD
We have not implemented a formal policy or procedure by which our stockholders
can communicate directly with our Board of Directors. Nevertheless, every effort
has been made to ensure that the views of stockholders are heard by the Board of
Directors or individual directors, as applicable, and that appropriate responses
are provided to stockholders in a timely manner. We believe that we are
responsive to stockholder communications, and therefore have not considered it
necessary to adopt a formal process for stockholder communications with our
Board. During the upcoming year, our Board will continue to monitor whether it
would be appropriate to adopt such a process.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers and directors,
and persons who own more than 10% of our common stock, to file reports regarding
ownership of, and transactions in, our securities with the Securities and
Exchange Commission and to provide us with copies of those filings. Specific due
dates for these reports have been established. Based solely on our review of the
copies of such forms received by us, or written representations from certain
reporting persons, we believe that during the fiscal year ended December 31,
2011, each of the forms were filed timely.
ITEM 11. EXECUTIVE COMPENSATION
We have not paid since our inception, nor do we owe, any compensation to our
executive officers, Mr. Mordechay David and Mr. Shamir Benita. There are no
arrangements or employment agreements with our executive officers or directors
pursuant to which they will be compensated now in the future for any services
provided as an executive officer, and we do not anticipate entering into any
such arrangements or agreements with them in the foreseeable future.
OUTSTANDING EQUITY AWARDS AT 2011 FISCAL YEAR-END
We do not currently have a stock option plan or any long-term incentive plans
that provide compensation intended to serve as incentive for performance. No
individual grants of stock options or other equity incentive awards have been
made to any executive officer or any director since our inception; accordingly,
none were outstanding at December 31, 2011.
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EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL ARRANGEMENTS
There are currently no employments or other contracts or arrangements with our
executive officers. There are no compensation plans or arrangements, including
payments to be made by us, with respect to our officers, directors or
consultants that would result from the resignation, retirement or any other
termination of such directors, officers or consultants from us. There are no
arrangements for directors, officers, employees or consultants that would result
from a change-in-control.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDERS MATTERS
PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding the beneficial ownership of
our common stock as of December 31, 2011 for:
* each person, or group of affiliated persons, known by us to
beneficially own more than 5% of our common stock;
* each of our executive officers;
* each of our directors; and
* all of our executive officers and directors as a group.
We have determined beneficial ownership in accordance with the rules of the
Securities and Exchange Commission. These rules generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power or
investment power with respect to those securities. The person is also deemed to
be a beneficial owner of any security of which that person has a right to
acquire beneficial ownership within 60 days. Unless otherwise indicated, the
persons or entities identified in this table have sole voting and investment
power with respect to all shares shown as beneficially owned by them, subject to
applicable community property laws, and the address for each person listed in
the table is c/o Winecom Inc., 2 Duchifat Street, Kibbutz Dovrat, D.N Emek
Yezreel 19325, Israel.
The percentage ownership information shown in the table below is calculated
based on 5,000,000 shares of our common stock issued and outstanding as of
December 31, 2011. We do not have any outstanding options, warrants or other
securities exercisable for or convertible into shares of our common stock.
Amount and Nature
Title of of Beneficial Percentage
Class Name of Beneficial Owner Ownership of Class
----- ------------------------ --------- --------
Common Stock Mr. Mordechay David, President 2,000,000 40.00%
and Director
Common Stock Mr. Shamir Benita, Treasurer, 2,000,000 40.00%
Secretary and Director
Common Stock All officers and directors 4,000,000 80.00%
as a group (2 persons)
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We are unaware of any contract or other arrangement the operation of which may
at a subsequent date result in a change in control of our Company.
We do not have any issued and outstanding securities that are convertible into
common stock. None of our stockholders are entitled to registration rights.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
POTENTIAL CONFLICTS OF INTEREST
Since we do not have an audit or compensation committee comprised of independent
directors, the functions that would have been performed by such committees are
performed by our directors. Thus, there is a potential conflict of interest in
that our directors and officers have the authority to determine issues
concerning management compensation and audit issues that may affect management
decisions. Our officers and directors have conflicts of interest in that they
have other time commitments that will prevent them from devoting full-time to
our operations, which may affect our operations. We are not aware of any other
conflicts of interest with any of our executives or directors.
DIRECTOR INDEPENDENCE
We are not subject to listing requirements of any national securities exchange
or national securities association and, as a result, we are not at this time
required to have our board comprised of a majority of "independent directors."
Our determination of independence of directors is made using the definition of
"independent director" contained in Rule 4200(a) (15) of the Marketplace Rules
of the NASDAQ Stock Market ("NASDAQ"), even though such definitions do not
currently apply to us because we are not listed on NASDAQ. We have determined
that none of our directors currently meet the definition of "independent" as
within the meaning of such rules as a result of their current positions as our
executive officers.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
AUDIT FEES
The aggregate fees billed during the fiscal years ended December 31, 2011 and
2010 for professional services rendered by Weinberg & Baer LLC, with respect to
the audits of our 2011 and 2010 financial statements, as well as their quarterly
reviews of our interim financial statements and services normally provided by
the independent accountant in connection with statutory and regulatory filings
or engagements for these fiscal periods, were as follows:
Year Ended Year Ended
December 31, December 31,
2011 2010
------ ------
Audit Fees and Audit Related Fees $7,900 $5,800
Tax Fees -- --
All Other Fees -- --
------ ------
TOTAL $7,900 $5,800
====== ======
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In the above table, "audit fees" are fees billed by our Company's external
auditor for services provided in auditing our Company's annual financial
statements for the subject year. "Audit-related fees" are fees not included in
audit fees that are billed by the auditor for assurance and related services
that are reasonably related to the performance of the audit review of our
company's financial statements. "Tax fees" are fees billed by the auditor for
professional services rendered for tax compliance, tax advice and tax planning.
"All other fees" are fees billed by the auditor for products and services not
included in the foregoing categories.
PRE APPROVAL POLICIES AND PROCEDURES
We do not have a separately designated Audit Committee. The Board of Directors
pre-approves all services provided by our independent auditors. All of the above
services and fees were reviewed and approved by the Board of Directors either
before or after the respective services were rendered.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Exhibit
Number Description
------ -----------
31.1 Certification of CEO Pursuant to 18 U.S.C. ss. 1350, Section 302
31.2 Certification of CFO Pursuant to 18 U.S.C. ss. 1350, Section 302
32.1 Certification Pursuant to 18 U.S.C. ss.1350, Section 906
32.2 Certification Pursuant to 18 U.S.C. ss. 1350, Section 906
101 Interactive data files pursuant to Rule 405 of Regulation S-T
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WINECOM INC.
Date: March 20, 2012 By: /s/ Mordechay David
-----------------------------------
Mordechay David,
President and Director
(Principal Executive Officer)
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